Dr. Mark Pauly releases new book “Applied Healthcare Economics”

CHIBE affiliate Mark Pauly, PhD, MA, has a new book out later this month called “Applied Healthcare Economics: Unexpected Insights for Management and Policy.“

The book is for managers and policy makers without an economics background and covers challenges in health care, such as decisions on what reimbursement levels to accept and how to deal with social determinants of health. It debunks myths and suggests solutions.

CHIBE spoke with Dr. Pauly for a Q&A about his new book, which can be pre-ordered here.

You mention that some points you make in the book are counterintuitive. For example: “Cost shifting cannot happen in a world of profit-maximizing firms, better health insurance is not always good for you, nonprofit hospitals are no different from investor-owned ones. And Malcolm Gladwell is wrong about why people use hospitals.” Do you have a favorite counterintuitive point that you could briefly describe for us?

Malcolm Gladwell wrote that it is absurd to imagine that middle class people would use a hospital just because insurance covered it. I recently berated Larry Summers for writing that Medicaid cuts would just lead hospitals to charge more to those with private insurance. If they would charge more, I would say, they would have already done so.

You cite Plato who “hypothesized that we humans know everything at birth and life is just a process of remembering what we forgot.” In writing this book, what stands out to you as a lesson or a data point that you once knew but had forgotten? 

That people will voluntarily choose insurance that protects them against medical underwriting if they should become a high risk.

You mention that you hope to “surprise a little, reassure some, and warn a lot.” What are some of the most important warnings you’d give to managers? 

I’d warn people not to jump to conclusions about the desirability of things like value-based care or the amount of waste in American health care without looking carefully at the evidence.

Is there anything else you’d like to add about your new book or any key takeaways?

Managers need to rely on data and on thinking before they leap into something everybody else is doing.